How Will Your Undergrad Debt Affect Your Graduate School Plans?

Your undergraduate degree is going to be an essential stepping stone in your personal and professional development. However, a lot of individuals are faced with the crippling debt that plagues them for years after they graduate.

Given the exorbitantly high costs of college, especially private institutions in the U.S., it comes as no surprise that thousands of students across the country rely on student loans to get them through their 2 or 4-year degrees. These degrees have become the bare minimum requirement for most well-paying jobs and any professional development, including a graduate or specialized degree.

Whether you’re entering law school, medical or dental school, or getting your masters’ degree, you want to cover all your bases. A major factor that many of us forget to consider is the potential impact of our undergrad loans on our grad and post-grad aspirations.

Is grad school truly worth it?

While no two situations are alike and there are plenty of variables that can differ from one person to the next, you’re not alone if you’re fresh out of college or have been working for a while and are ready for the next chapter.

There are a lot of benefits to attending grad school after you finish your undergraduate degree. It’s a major milestone and one that will shape you in more ways than one. It’s not about the qualification itself; it’s a rigorous and demanding journey into your professional development.

You’ll gain crucial skills in your field and industry, but you’ll also be developing and finessing your specializations and skillset. At the undergraduate level, especially in the U.S., you’re exposed to a range of subjects, schools of thought, and disciplines to help you broaden your horizons.

However, in grad school, the goal is to help you become an expert who possesses certain skills, has networking, research, and writing opportunities. In a saturated and highly-competitive economy, a graduate qualification can help you stand out among other candidates. Program requirements and structures vary across disciplines, so each graduate experience offers a unique training opportunity for you.

But while it’s an important investment you’re making for your future, it might not go as planned if you’re still paying off your undergrad loans. Some of the most common hurdles you’re likely to face when starting grad school are:

The inability to get a second loan

While grad school degrees are generally shorter than undergrad, they can cost you more. There are various factors for this, including the higher level of qualification, the greater focus, the more intense curriculum, and more specialized and qualified faculty members.

It’s difficult to pay for grad school, especially straight out of college or without a substantial income, and more so if you’re completely self-financing. If you’re in debt from your time in undergrad, your credit scores may not be sufficient to help you secure a second loan.

You might have to forego or delay grad school

The inability to take a second loan is one that can cost you the opportunity to attend grad school altogether—or significantly delay it. This is a problem that many people experience, unfortunately.

It’s too risky to drown in massive amounts of debt without a significant or appropriate payoff, knowing that you’re going to be committing to thousands of dollars worth of debt.

This can push your plans around, leaving you to work for a few years before returning to school. And at that point, it can be even more challenging if you’re raising a family or trying to buy a home.

Deferring payments could spell trouble

Not repaying your existing debt on time, especially without a genuine reason, can be the quickest route to financial distress. Deferring payments and opting for a longer repayment plan in your undergrad can help in the short-term, but by no means gives you a free pass.

Poor planning and delayed payments mean your existing debt is carried forward year after year, accumulating to a hefty sum, with accrued interest rates.

How to manage both simultaneously

However difficult, it’s not impossible to tackle your student debt from your undergraduate and graduate education.

It requires having a solid financial strategy, planning, and realistic expectations of what your income will look like after graduation.

If you know and plan on going to grad school during your undergraduate, your security lies in your ability to plan ahead. There are a few financial strategies that you can implement to prepare ahead, including:

Work and save to pay part of your loan

During your graduate degree, seek part-time employment to save and direct money toward your loans. If you’ve secured a loan and are using it to pay for your grad school degree, the stipend, salary, or other income you receive can go toward your debt.

Don’t defer undergrad repayments

While tempting to defer your payments altogether, this may not be the best idea. As mentioned earlier, deferment isn’t an out. You will eventually owe what you borrowed, with greater interest.

You will have more time after grad school to pay those loans off, so focus on your undergraduate loans in the meantime.

Focus on the interest if anything

If you can’t afford to make full payments or to pay the principal, start paying off the expected interest. This will help balance things out by letting you end your payments at the same amount you borrowed. So, if by the end of your repayment plan, you’re expected to owe $10,000 in interest, you can pay that during your deferment period.

Look into refinancing your loan

It can be overwhelming to manage several loans simultaneously, especially while you try to get through the challenges of graduate education and plan for your future employment or perhaps post-graduate education. Refinancing your loans allows you to consolidate and repay existing debt while focusing on a single amount and repayment period.

Is grad school expensive? Yes.

Is it difficult? Incredibly.

Is it worth it? Yes!

Education Loan Finance (ELFI) is always looking to help aspiring graduate students to achieve their dreams. You can look into their loan refinancing and graduate loans and get more information by reaching out to them today.

About the Author

The writer is a graduate student at one of the leading state colleges in the country, sharing their experience of tackling student debt and balancing their finances with students in the same situation.